MORTGAGE DISCLOSURE IMPROVEMENT ACT

Consumers have another level of protection in choosing their mortgage plan under the passing of the Mortgage Disclosure Improvement Act (MDIA).

In the past, consumers could be charged application and appraisal fees before seeing the details about the mortgage program they chose. No longer.

No monies may be collected from the borrower with the exception to a credit report fee until they receive the initial disclosures. This may cause a delay in when the appraisal is ordered, as we cannot order the appraisal without the signed disclosures.

Additionally, if the APR on a fixed-rate loan increases by more than 0.125%, new disclosures must be prepared and delivered to the borrower. There is now a three-day waiting period from delivery of disclosures until an appraisal report can be ordered. If re-disclosure is necessary, three more days of waiting follow before loan documentation can be signed. Also, the loan can never close fewer than seven days from the initial, accurate disclosure.

There are unintended consequences from this new rule. This means longer closing times for all types of mortgage loans. If inaccurate fees for any service provider (attorney, title insurance, appraiser, etc) are listed, re-disclosure means a longer wait.

Be sure to allow sufficient turn times in your purchase transactions, as three weeks for a mortgage contingency and the usual 30-day period for closing may now be insufficient.